This paper analyzes employment effects of a policy reform that was introduced as a measure for targeted integration of foreigners into local labor markets in Germany. The Residence Rule puts additional constraints on initial residence decisions for refugees after having received a permanent residence permit. Given that this reform applies to a subset of refugees only, it creates exogenous variation that I exploit in a Differences-in-Differences analysis. Using a novel data set, the IAB-BAMF-SOEP Survey of Refugees in Germany, the results suggest a negative effect of the reform on the probability to take up employment. This effect is robust to the inclusion/exclusion of covariates. Yet, since sample size in the post-treatment period is relatively small, some specifications yield statistically insignificant effects.

The Berlin Behavioral Economics Colloquium and Seminar are a joint effort between DIW, WZB, HU Berlin and TU Berlin (in cooperation with CRC TRR 190) with the aim of fostering the exchange between active researchers in the areas of behavioral and experimental economics.

Similar to many other OECD countries, income inequality in Germany has increased over the past decades. However, it is not yet clear to what extent there has actually been a decline at the household level. Our study therefore examines what is behind the increased income inequality: increases or decreases of household incomes or a change in the composition of the population. Using SOEP data from 1995-2015 and hybrid panel regressions, we show that income inequality increases between different educational groups and EGP-classes, as well as between migrants and Germans. Furthermore, we show that the increasing income inequality at the household level cannot be attributed solely to a change in the composition of the population, but that disadvantaged households have experienced lower increases in disposable household income over time than other households.These findings suggest that hopes of upward income mobility are increasingly disappointed among the more disadvantaged population groups in recent years.

The Berlin Behavioral Economics Colloquium and Seminar are a joint effort between DIW, WZB, HU Berlin and TU Berlin (in cooperation with CRC TRR 190) with the aim of fostering the exchange between active researchers in the areas of behavioral and experimental economics.

We test the predictions of the Roy-Model about the self-selection of immigrants using an administrative dataset including about 90 % of Italians living abroad. The data comprises 13 countries with substantial differences in inequality and levels of redistribution: Argentina, Australia, Belgium, Brazil, Canada, France, Great-Britain, Germany, The Netherlands, New-Zealand, Switzerland, the US, and Venezuela. Our results confirm the predictions of the model: We find a negative, substantial and significant relationship between the level of redistribution – our indicator for the returns to human capital, measured by the (relative) difference of market and after-tax inequality in the host country in the year of arrival – and immigrants’ individual degree of selection, as well as the likelihood to be positively self-selected. These results hold after including covariates at the individual and country level, as well as controlling for migration costs. Our analysis also shed light on the factors associated with the self-selection of immigrants.

Since the early 1990s, immigration has been a more important source of population increase in the EU than the natural change due to births and deaths, while in recent years Europe is facing a large inflow of refugees. At the same time, Eurobarometer opinion surveys reveal that immigration tops the list of challenges that EU citizens are most concerned about and therefore effective policies toward immigration are more important now than ever.

Following the keynote address by Jutta Cordt on European and German immigration policies, the event will focus on integration of migrants in the EU and explore the reasons behind the large differences in migration integration effectiveness across the EU member states.

Presentation of the Report: People on the Move: Impact and Integration of Migrants in the European Union

Panel Discussion

Manu Bhardwaj Vice President for Research and Insights, Mastercard Center for Inclusive Growth

Herbert Brücker Professor of Economics at the University of Bamberg and head of the department for International Comparisons and European Integration at the Institute for Employment Research (IAB) in Nuremberg

Naika Foroutan Vice-Director of the Berlin Institute on Integration and Migration Research (BIM)

Manjula M. Luthria Senior Economist at the Social Protection Labor and Jobs Global Practice, World Bank

The event will be followed by a lunch. We hope that you will be able to join us, and look forward to your participation. To participate, we kindly ask you to register by emailing events@diw.de .

The Berlin Behavioral Economics Colloquium and Seminar are a joint effort between DIW, WZB, HU Berlin and TU Berlin (in cooperation with CRC TRR 190) with the aim of fostering the exchange between active researchers in the areas of behavioral and experimental economics.

Beside risk preferences, willingness to trust in others is one of the key requirements in economic transactions. A growing literature in economics deals with the question what factors determine an individual’s willingness to trust. Existing results highlight a strong and robust positive correlation between measures of cognitive abilities and trust measures. However, most of the existing literature only focuses on single country studies, or is only able to include proxies for cognitive ability. The present study applies data from the Programme for the International Assessment of Adult Competencies (PIAAC) including survey measures of trust for 30 countries around the world. In addition, PIAAC contains comprehensive measures of cognitive abilities in three domains, numerical skills, literacy skills, and problem solving skills. The results show, that the average level of trust varies substantially among the analyzed countries with the Scandinavian countries ranked at the top of the scale. The evidence supports a positive correlation between trust and cognitive abilities over all countries. This result is robust to including country fixed effects or controlling for country characteristics. However, the strength of this relationship varies substantially between countries.Including measures of democracy in the respective countries shows that the strength of the relationship between trust and cognitive skills increases with the level of democracy in a society. In the second part of the paper, based on PIAAC-L – a longitudinal extension of the German PIAAC data – German reunification is used as a natural experiment to analyze the effect of democracy in a setting that allows for a more causal interpretation. The results support the finding of a positive effect of democracy on the relationship between trust and cognitive ability.

The Berlin Behavioral Economics Colloquium and Seminar are a joint effort between DIW, WZB, HU Berlin and TU Berlin (in cooperation with CRC TRR 190) with the aim of fostering the exchange between active researchers in the areas of behavioral and experimental economics.